Correlation Between Sao Ta and Thien Long
Can any of the company-specific risk be diversified away by investing in both Sao Ta and Thien Long at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sao Ta and Thien Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sao Ta Foods and Thien Long Group, you can compare the effects of market volatilities on Sao Ta and Thien Long and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sao Ta with a short position of Thien Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Ta and Thien Long.
Diversification Opportunities for Sao Ta and Thien Long
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sao and Thien is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sao Ta Foods and Thien Long Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thien Long Group and Sao Ta is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sao Ta Foods are associated (or correlated) with Thien Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thien Long Group has no effect on the direction of Sao Ta i.e., Sao Ta and Thien Long go up and down completely randomly.
Pair Corralation between Sao Ta and Thien Long
Assuming the 90 days trading horizon Sao Ta is expected to generate 6.35 times less return on investment than Thien Long. But when comparing it to its historical volatility, Sao Ta Foods is 2.11 times less risky than Thien Long. It trades about 0.11 of its potential returns per unit of risk. Thien Long Group is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 5,880,000 in Thien Long Group on September 22, 2024 and sell it today you would earn a total of 920,000 from holding Thien Long Group or generate 15.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sao Ta Foods vs. Thien Long Group
Performance |
Timeline |
Sao Ta Foods |
Thien Long Group |
Sao Ta and Thien Long Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sao Ta and Thien Long
The main advantage of trading using opposite Sao Ta and Thien Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sao Ta position performs unexpectedly, Thien Long can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Thien Long will offset losses from the drop in Thien Long's long position.The idea behind Sao Ta Foods and Thien Long Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Thien Long vs. South Basic Chemicals | Thien Long vs. Telecoms Informatics JSC | Thien Long vs. Sao Ta Foods | Thien Long vs. Japan Vietnam Medical |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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